What not to say to a big insurance company during a policy dispute

"No judge in the world is going to rule for a 200 billion dollar company," Anthony Digati is alleged to have told the New York Life Insurance Company. He was wrong about that.

Anthony Digati wasn’t just another disgruntled client of the New York Life Insurance Company. He was a former agent and manager at the firm who had become ensnared in a $49,500 policy dispute.

Like many customers of large insurance companies, Mr. Digati, 52, of Chino, Calif., felt he was being cheated and treated unfairly.

The company disagreed.

Rather than walk away, Digati decided to take the dispute to another level. He created a website dedicated to New York Life’s products and hired an email spam service.

Then he did something that would get him into a lot of trouble. He sent a letter and several emails advising New York Life officials that it would be in the company’s best interests to pay him his money… or else.

This week a federal grand jury in New York indicted Digati for allegedly attempting to extort up to $3 million from the company in exchange for not unleashing a massive Internet spam attack on New York Life’s business reputation.

Extortion or just hyperbole?

The case is interesting because it is not entirely clear from court documents whether Digati was – as the government claims – intent on extortion – or whether he was merely an extraordinarily frustrated and dissatisfied customer who engaged in hyperbole and exaggerated threats.

“I’m sorry it had to come to this, but I guess you won’t listen to what the customers [sic] concerns are,” he wrote New York Life in an email in February. “You enjoy ripping policy holders off with obscure products bought because of the trust you have established over 160+ years. You enjoy misleading the public and I will make it my purpose in life to educate them.”

Digati’s website NewYorkLifeproducts.com is no longer in service. Prosecutors have not disclosed the content of the site in court documents. Instead, the indictment focuses on a series of threatening emails Digati sent to more than a dozen New York Life employees, executives, and one board member.

“I highly suggest you read every word on this website with an IT guy, as well as someone who has the authority to write me a check,” he wrote. He said the company had until March 8 to respond with payment or he would launch his spam attack.

He said since the company had refused to refund his $49,575.97, he would multiply his claim by four and was now demanding $198,303.88. “This amount is NOT negotiable, you had your chance to make me an offer, now I call the shots,” he said.

'I am going to cost you millions of dollars'

“At this point you’re probably asking yourselves why should I even listen to this crazy fool, what can he do and why should I pay him. NUISANCE VALUE is why. I am going to cause you millions of dollars in lost revenue, good faith and general trust in your company.”

Digati told the New York Life officials that he was active on more than 200 Internet forums dealing with financial services and would direct traffic to his New York Life website. He said he would send two million emails every two days for three weeks in a campaign against New York Life.

“I think you get the idea. I am going to drag your company name and reputation through the muddiest waters imaginable. This will cost you millions in lost revenues,” he wrote.

He said if New York Life agreed to settle his claim he would agree not to activate his website and would destroy its content. He also promised to sign a non-disclosure agreement, agree to be stricken as a policy holder, and forfeit any owed retirement benefits. He said if there was any delay the price would increase to $3 million.

Digati added: “By the way: Yes, I am crazy… Yes, I am vindictive. Yes, I am extremely upset. Yes, I will do everything that I said. I have absolutely nothing to lose or any fear of retaliation, no judge in the world is going to rule for a 200 billion dollar company when there is a lonely customer that you stole from.”

Digati was wrong about the judge. He was arrested March 6 in California where a federal magistrate judge found probable cause to believe he engaged in extortion. Digati was transported to New York where he pleaded not guilty. He was later released on bond pending a trial.

If convicted Digati faces up to two years in prison, a $250,000 fine, and forfeiture of his computer.

[Editor's note: The original headline for this story was incorrect.]